THE beef industry is bracing for a tough six months, according to Meat and Livestock Australia chairman Don Heatley.

Mr Heatley, who was re-elected to the MLA board last week, said a huge lift in input costs had eroded farm income, particularly in "input-intensive southern production systems".

And a dark cloud loomed over the strength of demand, particularly for high-end cuts in the current global economic downturn, he said.

Mr Heatley said livestock producers had endured a tough year and faced another difficult one.

The rapid global growth in the number of consumers with disposable income was a key reason why more red meat had been sent to emerging markets in the past year than to major markets such as Japan, the US and Korea.

These new markets had minimised the impact of weaker demand in traditional markets , he said.

Meanwhile one of Australia's major high-value export markets, and the world's second-largest economy, Japan, this week officially slipped into recession.

MLA's international markets general manager Dr Peter Barnard said short-term exports to Japan were not expected to grow significantly, but but demand from the US and Korea would increase.

Dr Barnard said there was caution among buyers, particularly for prime cuts, with the demand expected to be for manufacturing-grade products.

He said while demand for prime cuts were vulnerable in today's climate, "in my lifetime the US, Japan and Korea, will continue to be the most important, critical and profitable for the Australian industry".

"But, we still must look for growth in Asia and Russia," he said.

Dr Barnard said the price of cattle in real terms had declined over time, as had the price of most agricultural products.

"This is true the world over," he said.

At the MLA Meat for Profit Day in central NSW, a producer-member of Australian Beef Association, asked Dr Barnard why US producers received more for their cattle than Australians did.

Dr Barnard said US cattle numbers were declining, so the return from them "must not be that good".

He said the US had lower processing costs and a huge domestic market, 20 times larger than Australia's.